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Online Retail Giant Amazon Goes High Fashion!

The online retailer is shooting 3,000 fashion images a day
in a photo studio using patent-pending technology.

And it is happily losing hundreds of millions of
dollars a year on free shipping — and, on apparel, even free returns to
keep its shoppers coming back.

Having wounded the publishing industry, slashed pricing in
electronics and made the toy industry quiver, Amazon is taking on the high-end
clothing business in its typical way: go big and spare no expense.

“It’s Day 1 in the category,” Jeff Bezos, Amazon’s
chief executive, said in a recent interview. Though characteristically
tight-lipped on bottom-line details, Mr. Bezos said the company was making a
“significant” investment in fashion to convince top brands that it wanted to
work with them, not against them.

The traditional retail world and many major brands that
want no part of Amazon are gearing up to fight for their lives.

“It has the latitude to set prices and charge whatever it
wants,” Sucharita Mulpuru, an analyst for Forrester Research, said of Amazon.
“That is a huge threat for brands.”

Amazon has sold clothing for years. But recently it has
focused on signing on hundreds of contemporary and high-end brands, including
Michael Kors, Vivienne Westwood, Catherine Malandrino, Jack Spade and Tracy
Reese, and it continues to prowl for more. On Monday, some of Amazon’s muscle
was on display as the company sponsored, and live-streamed, the Costume
Institute Benefit at the Metropolitan Museum of Art and the accompanying
exhibit. Mr. Bezos, the event’s honorary chairman, said that he was advised by
Anna Wintour, Vogue’s editor, to wear a pocket square with his Tom Ford tuxedo
(which is not available on Amazon). He did so.

Amazon’s decision to go after high fashion is about plain
economics. Because Amazon’s costs are about the same whether it is shipping a
$10 book or a $1,000 skirt, “gross profit dollars per unit will be much higher
on a fashion item,” Mr. Bezos said, and it already makes money on fashion.
While its MyHabit site, started last year, uses a flash-sale model to
compete with Gilt Groupe, Mr. Bezos says the company’s new effort is not about
selling clothes at deep discounts but at prices that ensure that “the designer
brands are happy.”

Amazon has not just size on its side but money. The company has
about $5.7 billion in cash and marketable securities, and Mr. Bezos has
long taken a stance that investing in the business is the best place
to use it. The company can afford to do things that some competitors cannot,
like hire a bevy of stylists for the Web site models or investigate
replacing the plain brown shipping box with a fancier package for clothes.

Until now, fashion has been one of the few categories that
Amazon has tried to dominate without success. In addition to its own site,
Amazon bought the shoe site Zappos.com for more than $1 billion in 2009,
started the shoe site Endless.com and MyHabit, and bought the boutique
Shopbop in 2006.

But many brands stayed away because they said Amazon’s site
often looked too commoditized. “It’s not a place where you look at it and are
like, ‘Oh, my clothes look and feel really good,’ ” said Andy Dunn,
founder of the men’s fashion brand Bonobos, which does not sell through Amazon.

Amazon hopes to fix that problem by going luxe. Mr. Bezos
said Amazon.com’s initial forays into the high end had helped raise apparel
sales by triple digits.

Amazon’s considerable computing capability, for example, has
been turned to fashion and the analysis of enormous amounts of shopping data.
The company has also made a “disproportionate” investment in photography, said
Cathy Beaudoin, the president of fashion for Amazon. The photography studio, in
Kentucky, can shoot more than two images a minute, allowing the company to post
new items daily on the Web that were photographed hours earlier.

Most of all, the company is working to improve its
presentation, so far most evidently on MyHabit, which Mr. Bezos said
represented where Amazon wanted to go with all of its Web design for fashion.

Instead of static product images, for example, models spin
and pose to show off the clothing. The model’s body measurements and the
clothing measurements are provided to help with sizing. And shopper-friendly
advice — does the size 8 shoe run big or small? — is prominent.

The ramp-up has created buzz as the company has hired
models, stylists and makeup artists, started using customer data to personalize
brand and size search results, and run the first advertisement campaign ever,
in print and outdoors, for the Amazon clothing store.

In the retail clothing world, fears are growing that few
will be able to compete with a stepped-up Amazon.

For some brands, the company’s size alone makes an overture
from Amazon difficult to reject. “The amount of eyeballs and traffic and retail
dollars that are generated through their Web site” is impressive, said Alex
Bhathal, co-president of Raj Manufacturing, which makes licensed swimwear brands
like Ella Moss.

Amazon can also offer brands more attractive terms than many
other stores. For instance, Amazon does not ask for “markdown money” when items
do not sell, or return unsold product to a brand, said Ron Friedman, an
accountant at Marcum L.L.P. who advises brands like James Perse and American
Rag.

And to woo brands, Amazon is willing to make big buys. Jason
Cauchi, the creative director of Dallin Chase, had been selling some
merchandise to Amazon’s Shopbop. Recently Amazon said it would buy items from
the entire collection, which Mr. Cauchi said was a rare offer and difficult to
refuse.

A retailer like Amazon would typically pay brands a
wholesale price for clothes, then set the retail price itself (although more
powerful brands often mandate a minimum retail price).

While brands sell some of the same items to different
stores, they are increasingly developing exclusive colours or styles to avoid
price-comparison issues. “A manufacturer does not want to kill a business, and
the best way to kill a business is to have the same product selling for less on
Amazon,” Mr. Friedman, the retail accountant, said.

But Mr. Bezos said that, despite having taken a low-price
approach in other industries, Amazon would not in fashion. “There’s a
sophisticated markdown cadence in the fashion industry that we think makes
sense and we’re basically following that established approach,” he said.

There are many disbelievers, given Amazon’s history in other
industries. Mr. Bezos, moreover, has to deal with the fact that he is no
fashion guy. Asked in the interview about the brands he was wearing, Mr. Bezos
could not name the brands of his shirt or shoes, which he said he bought in New
York years ago. The jeans, he said, were Prada (not available on Amazon); his
blue “Jeff” security badge was dangling from them.

Millicent Imade Arebun is a fashion blogger and editor with over 8years experience in the fashion business. CEO Millare Fashion Tv and Actn Fashion Editor of the National Daily Newspaper, Millicent is part of the new breed of industry players, quietly shaping, projecting and capturing the growth, travails and challenges, of the budding Nigerian fashion industry.